Cutting Medicare Rates To Physicians Is Not The Answer

How long will Congress continue to hang an ax over the heads of physicians threatening to cut Medicare reimbursement? We all know that healthcare costs are rising at a rate much faster than we can afford. We know too that the Medicare system is going broke at the current rate of cost increases. Now we also have the new healthcare reform law greatly expanding government paid coverage to those who have previously been uninsured. It is a perfect storm of financial ruin for publicly funded healthcare. So the answer is cutting rates to physicians? I don't think so.

This is not where we should start, for a number of reasons. First of all the cuts are not focused to address the disparity between primary care physicians and the specialists. Currently specialists can make five times the salary of primary care physicians. There is a shortage of primary care providers now that will continue to get much worse in the near future. Yet the cuts to Medicare will affect these physicians as much as the specialists. If they are truly effective, we will just make our physician shortage worse for the much needed primary care providers.

But will they even be effective? Perhaps HHS should learn from what they did to physicians administering chemotherapy back in 2003. Clearly an inequity in reimbursement had occurred by 2003 and some Oncologists were making record profits from Medicare patients appropriately receiving chemotherapy. Payments were too high so HHS decided to slash reimbursement across the board. The thought was that freestanding, for profit chemotherapy centers run by physicians would close and patients would return to hospital centers who would just eat the losses from these now unprofitable patients. Instead, the Oncologists just changed their orders for chemotherapy to more sophisticated but higher reimbursed drugs, thus increasing the overall cost of chemotherapy to Medicare. Some will argue that this was just a natural shift to newly available drugs. But those close the the situation will acknowledge that oncologists reacted to the reimbursement cuts without compromising the quality of care delivered to patients.

We do need to contain costs and we do need to make our healthcare delivery system more efficient. But this is a complex system that requires complex and comprehensive solutions, not just an arbitrary cut to physician fees.

More on this later.

Mark Brodeur